Ford (NYSE: F) plans to increase it production facilities and dealer outlets in China two-fold by 2015. The No. 2 US car firm said it would build a $760 million auto assembly plant in the eastern Chinese city of Hangzhou. Ford has joined the race to gain market share in the People’s Republic where 18 million cars and light truck were sold last year.
But, Ford faces formidable odds. GM (NYSE: GM) and its local joint venture partner SAIC are the market share leaders. Global manufacturing giant VW is not far behind. The rush into China included every major auto firm in the world. The high-end luxury market has attracted BMW, Mercedes, and Audi–each of which believes it can cater to China’s new rich.
The other hurdle in China is that nationwide sales have stalled. First quarter shipments of new cars and light trucks were up only 4.5%. If that level continues, China will rapidly become much less attractive to every manufacturer in the market. Ford may find it has overbuilt.